HSA Excess Contributions

Forum|Forum|1 year ago
March 9, 2025
1 reply
6 views

My 2024 HSA Excess Contribution of $1713 shown on Form 1099-SA was entered into TurboTax.

Under form 8889 in turbo tax it shows no tax is due. However, sense that amount was taken out of my paycheck tax free I believe I have to pay taxes on the amount that was taken out and distributed to me. This distribution was taken out this year before the due date so there is no penalty but why doesn't it show the taxes that are owed on it? Some websites state excess contributions should be reported under other income but why doesn't turbo tax have it entered there as taxable income?

BillM223

Level 15

You don't see the excess contributions reported on your 2024 return, because the excess contributions were already reported on your 2023 return.

If your HSA contributions were made through your employer by means of payroll deduction, the in 2023, at the moment that TurboTax detected the excess contributions, then TurboTax added back the excess to Other Income. That is why it is not added back in 2024.

When you have a distribution code of "2" on a 1099-SA, the only thing that is added to your income is the earnings in box 2 on the 1099-SA.

So go look at your 2023 return and see if the excess was handled there, and you'll realize that all is OK.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

TE290Author

Level 2

We had to take the money out of the HSA account in 2024 because my husband retired end of July 2024 and there is the requirement to stop contributing 6 months before retirement because of beginning Medicare.

We didn't know about that requirement till April 2024 after the company made it's contribution along with pretax payroll deductions which ended up being an excess for the year for only working for 7 months of the year.

I did look at 2023 taxes and there's no excess contribution there because the problem was in 2024. Hope this makes sense. Do we need to pay the taxes on the distribution he took this year along with the earnings? Thank you

BillM223

Level 15

OK, because you got the 1099-SA early this year, I assumed it was for 2023 (1099-SAs show normally a year later).

So when you went through the HSA interview in TurboTax for tax year 2024, and showed that your spouse's HDHP coverage ended in July, BUT, he had Medicare starting in January 1st? February 1st?, did TurboTax not tell you that you two had excess contributions? Did it tell you $1,713?

If so, and since this was done for the 2024 tax return, the excess contributions that came through your (his) employer should have been added back to Other Income (line 8f on Schedule 1 (1040)). Was it?

If not, there is something very off in what you are describing.

In any case, that is why the 1099-SA is not changing your income much - only the earnings are added to income with a distribution code of "2", because the excess contribution is added to income in a different way.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"